When the going gets tough in the stock market, we head to sea.
There’s a village on a sidewalk way down south in Belize and there’s a marina from which you can see the far horizon and leave on a boat for the reef.
We’ll be doing that.
So hang on. It can get rough when we flee the country.
Maybe nothing happens. I have a trading position that benefits from volatility and downside. It’s a longshot. The reason I’ve placed chips on the Red 34 of volatility bets is math.
It was 198 days ago that the TURF Bull Market (“Tariffs Undone, Reprieve Fulfilled”) left Sentiment depths. Translating to English, On April 22, our 10-point gauge of Demand rose over 4.0. We’ve haven’t been back below 4.0 since. (We bottomed at 2.1 Apr 15, 2025. Not the lowest low but among them.)
Who cares?
You should.
Since 2017 we’ve had three “bear” markets. There’s the brief and furious Pandemic Pullback in March 2020 that governments addressed by mass-manufacturing gobs of currency and shoving it into the stay-at-home maw.
Money solves nothing. Bales of bucks hucked at an economic swale create a peat bog that will burst into flames somewhere ahead and immolate all that currency in a shrieking 40-alarm fire.
But I’m sure it’ll work out eventually. Cough, cough.
And we had 2018 that people forget about. February that year suddenly rocked and rolled. We recovered. S&P Global created the Communications Services sector at September index rebalances that year. In October, the market tanked.
By the time we hit late December the market was down almost 20%.
And then there’s 2022. At the depths, we’d given back nearly all the Pandemic’s spiraling gains.
The point? The beginnings and ends of each move featured a drop in Sentiment below 4.0 on our Sentiment scale.
The time between those is measurable. The longest in that data set that we’ve ever gone from boom to bust was 208 days. That is from sometime in Feb 2021 to early December 2021, we never dipped below 4.0.
Then we did.
And it was the beginning of the end.
Against that backdrop, the canaries are getting nervous in the coal mine. They’re not dead yet. They’re counting days. We’re 198 days into a cycle fueled by AI that is approaching the cycle fueled by $16 trillion central-bank dollars.
Mathematically, there is a probability that the clock runs out. But we’re going to surpass 200 days. Sentiment is 5.3. On the supply side, Short Volume is 51.4% of volume in S&P 500 stocks. High but not clanging a claxon telling us all to get out of the nightclub.
(And yes, more volume is short than long, thanks to the proliferation of ETFs, options, futures, that now juice stocks – which means we depend on derivative value and shares created by market-makers to support prices.)
We could be heading once more into the breach, as William Shakespeare said. The trouble with saying so is you’re nearly always rendered a fool. You get through wiping the egg off your face, get yourself cleaned up, and the crowd has moved on.
And then you’re right when no one is looking. I’m making no pronouncements. I’m saying the math is…extended. It’s not a bubble. It’s not economics. It’s just math. Cycles occur measurably in market structure and as cycles go, this is a large outlier. An edge case.
Other than that, everything is fine.
And with that, we’ll pack up our bags with shorts and t-shirts, some rash guards and swimsuits. Sunscreen. Bug spray for the jungle.
And we’ll catch you in a couple weeks for an After Action Review.
